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Posted workers

Definition

A posted worker is defined as ‘a person who, for a limited period of time, carries out his or her work in the territory of an EU Member State other than the state in which he or she normally works’ (Council Directive 96/71/EC).

Directive 96/71 only takes employees into consideration. Different regulations apply to individuals moving across European countries who do not meet the Directive’s criteria for posted workers, such as migrant workers, sailors in the merchant navy and the self-employed.

It is still difficult to fully appreciate the importance of the phenomenon.Data on posted workers are not systematically collected in all Member States, and even where they exist, are not easily comparable. Therefore, at EU level, only estimates are available. In 2015, through the European Commission’s analysis of Portable Documents A1 (a PD A1 is a formal document stating that the holder pays social contributions in another Member State), the following estimates were made:

Number of posted workers in the EU: 2.05 million

Accounting for: 0.9% of total employment, 0.4% in full-time equivalent

Trends: increase by 41% between 2010 and 2015

Average duration of a posting: less than 4 months.

Some sectors rely on posted workers more than others. Posted worker arrangements are common in the construction sector, as well as in transport, telecommunications, entertainment, repairs, maintenance and servicing.

European regulations and discussions

1980 Rome Convention

The Rome Convention of 19 June 1980 on contracts regulation held that, whichever law applies, workers should be protected by the laws applicable in the host country. This requires Member States to oblige posting enterprises to respect local legislation and collective agreements.

1996 Council Directive

In 1996, the Council adopted a directive to address the challenge of balancing the rights of workers and companies. To avoid the risk of posted workers being misused or exploited, Directive 96/71/EC set out to clarify the regulations on posted workers’ working conditions. According to the directive, Member States have to ensure that companies give posted workers the minimum standard of employment conditions in the host country in terms of, for example, working hours, pay, annual leave, health and safety, protective measures and equal opportunities.

Posted worker regulations have been interpreted through several European Court of Justice (ECJ) rulings. The most seminal ones were the cases of Viking, Laval and Rüffert of the mid 2000s. These rulings aimed to delimit the rules applicable to posted workers. The Laval decision (Case C-438/05), along with its sister case, the Viking case (Case C-438/05) – which concerns the right of establishment as opposed to the freedom to provide services – states that a foreign undertaking should not be forced to adhere to a collective agreement (for instance, by way of strikes) as long as it abides by the minimum requirements set out in the relevant national legislation on posted workers.

In these cases, the ECJ ruled that industrial action in support of collectively agreed terms and conditions for posted workers, and the inclusion of collectively agreed terms in procurement contracts should not impede the implementation of EU principles governing:

the free movement of goods and services;

the freedom of establishment;

the freedom to provide cross-border services.

2014 Enforcement Directive

Recognising the need to resolve the problems of implementation and interpretation of Directive 96/71, on 21 March 2012 the Commission issued a proposal for two new rules governing the posting of workers in Europe.

The first rule was an enforcement Directive to improve the transposition and effective implementation of Directive 96/71EC of the posting of workers. The enforcement of Directive 96/71/EC aimed to reconcile the freedom to provide cross-border services under Article 56 TFEU, with due protection of the rights of workers temporarily posted abroad for that purpose. The main objectives were: to set more ambitious standards to inform workers and companies about their rights and obligations (Article 5); establish clear rules for cooperation between national authorities in charge of posting (Article 6); provide elements to improve the implementation and monitoring of the notion of posting to avoid the multiplication of ‘letter-box’ companies that use posting as a way to circumvent employment rules (Article 3); define the supervisory scope and responsibilities of relevant national authorities (Article 7); improve the enforcement of workers’ rights, including the introduction of joint and several liability for the construction sector for the wages of posted workers as well as the handling of complaints (Article 12).

The second rule was a Regulation clarifying the exercise of freedom of establishment and freedom to provide services with respect to social rights. Some concerns have been voiced following the Viking and Laval judgments, hence the proposed ‘Monti II’ regulation on the right to take collective action, including strikes.

Given the risks that, in the single market, economic freedom would prevail over the right to strike, the proposal stressed the absence of primacy between the right to take collective action and the freedom to provide services (Article 2). For disputes at EU level resulting from the exercise of the right to take collective action, including the right or freedom to strike in transnational situations or situations with a cross-border character, the proposal suggested the possibility of non-judicial settlements. It also set out a new alert mechanism for cross-border industrial conflicts which have serious implications (Article 4).

The destiny of the two rules follow different paths. On the one hand, the Commission received its first ‘yellow card’ since the Lisbon Treaty entered into force for its draft regulation clarifying the exercise of the right of economic freedoms (Monti II). Under the yellow card procedure, Member States’ national parliaments can disagree with a proposal up to eight weeks after its publication and launch a yellow card procedure. A total of 19 reasoned opinions were sent from national parliaments denouncing the proposal’s non-conformity with the subsidiarity principle. After re-examining its proposal, the Commission decided to withdraw the draft Regulation.

In the meantime, the European Parliament's Employment and Social Affairs committee adopted its proposal (June 2013) and, after some months of debate, the Council reached a compromise agreement in October 2013 on the two outstanding issues of national control measures and joint and several liabilities in subcontracting chains.

Directive 2014/67/EU was finally adopted by the co-legislators on 15 May 2014, with a transposition deadline of 18 July 2016 for Member States. No later than 18 June 2019, the Commission is bound to present a report on its application and implementation to the European Parliament, the Council and the European Economic and Social Committee, proposing, where appropriate, necessary amendments and modifications.

European Commission’s proposal for a targeted revision

Nevertheless, in the Commission’s view, a number of issues with the 1996 Directive remained unresolved. Therefore, on 8 March 2016, the Commission issued a proposal for a revision of the 1996 Directive, with a view to introducing changes in three areas: remuneration of posted workers, including in situations of subcontracting; rules on temporary agency workers; and long-term posting.

The proposal stated that posted workers will generally benefit from the same rules governing pay and working conditions as local workers. Posted workers have been subject to the same rules as host Member State employees in certain fields, such as health and safety. However, according to Directive 96/71/EC, the employer is not obliged to pay a posted worker more than the ‘minimum rate of pay’ set by the host country. This can create wage differences between posted and local workers and potentially lead to unfair competition between companies.

The proposal also sets out to ensure that national rules on temporary agency work apply when agencies established abroad post workers. Finally, if the duration of posting exceeds 24 months, the labour law conditions of the host Member States will have to be applied, where this is favourable to the posted worker.

However, the proposal encountered opposition from some EU Member States, largely in eastern Europe. By 10 May 2016, ten Member States had criticised the proposed changes on the grounds of conflict with the right to subsidiarity. The main focus for criticism of the proposal has been the application of the principle of ‘equal pay for equal work’ to posted and local workers.

The Commission persisted and finally adopted a Communication which confirmed that it maintained its proposal for a targeted revision of the Posting of Workers Directive presented on 8 March 2016.

European institutions’ reactions

The European Parliament’s Employment and Social Affairs Committee published a draft report on 2 December 2016, aiming to ‘establish a balance between ensuring a level playing field for undertakings and granting social protection for workers’, the emphasis being on transparency of information, ‘due entitlements’ for posted workers’ remuneration, and same conditions for workers hired by subcontractors or temporary employment undertakings.

The Employment and Social Affairs Committee adopted its report on the targeted revision of the Posting of workers in the framework of services on 16 October 2017. The main changes agreed by MEPs concerned remuneration and improving working conditions, duration of the posting and temporary agencies. This adopted text gave the Parliament the mandate to negotiate with the Council.

Adoption of the directive

On 20 March 2018, the European Parliament and the Council reached agreement on the revision of the posting of workers directive. This agreement was subsequently endorsed by the European parliament on 29 May 2018 and on 21 June 2018 by the Council. The main objectives of the adopted Directive include a ‘social legal base’. Article 1 of the Directive was amended to reflect that the Directive is about the protection of workers in the context of the provision of services. This is to ensure that the rights granted by the Charter of Fundamental Rights can in no way be undermined by the Directive and to strengthen the position of workers in possible court cases.

Regarding remuneration, the principle of ‘the same pay for the same work at the same workplace’ was accepted by both co-legislators. Their common aim is for posted workers to benefit from the same rules as local workers from day 1. It is the overall amount of remuneration received by a posted worker that must meet the level of remuneration laid down in the host Member State, with the provision that the reimbursement of expenses cannot be counted towards this amount. Article 3 was amended to indicate that the mandatory elements that constitute remuneration in a Member State must be available on a single official national website (the same website as the one in the Enforcement Directive of 2014). There is also a clarification that expenses made for travel, board and lodging are to be viewed separately from remuneration, paid for by the employer and not deductible from workers’ salaries. There should also be clarification of the different allowances regimes, with some precisions on what has to be paid according to the rules in the host country. In addition, if there are national rules about the conditions of accommodation in the host country for a local worker away from home for work, then these same rules must be applied to the posted workers.

In the adopted text, the maximum duration a posted worker can work under only the ‘hard core’ conditions of the Posting of Workers Directive, before all provisions of the labour law of the host country must be met, is 12 months, with a possible extension of 6 months via a notification of the company to the competent authority in the host country. Member States can choose to ensure that posted workers are covered by representative collective agreements in all sectors. Member States must ensure that posted workers are protected, at least, by the conditions of the Posting of Workers Directive in the case of a fraudulent posting, made, for instance, by a letterbox company.

The proposal made by the Commission was amended with a review clause to assess five years after the date of entry into force whether new measures in the field of subcontracting are necessary and for posted drivers in the road transport sector.

The new elements of this Directive will apply to the transport sector once the sector specific legislation (currently under negotiation) enters into force. Until that moment, there is a clear understanding by the three institutions and the Member States that the rules of the 1996 Posting Directive apply. The period of transposition is two years with an application in all Member States at the end of this period.

European social partners’ positions

Cross-sectoral social partners

Since the European Court of Justice rulings of the mid-2000s, the European social partners expressed different positions. The European Trade Union Confederation (ETUC) claimed the Directive had been too narrowly interpreted, leaving little room for host Member States or social partners to improve the working conditions of posted workers. Conversely, Business Europe stated the ECJ rulings clarified the legislation and helped to consolidate the Single Market.

The Commission and the EU Presidency invited the cross-sector European social partners – Business Europe, CEEP, UEAPME and ETUC – to deliver a report on how the ECJ rulings in the Viking, Laval, Rüffert and Luxembourg cases would affect workers’ mobility and rights. The document, adopted on 19 March 2010, expressed a number of common concerns and objectives but also exposed the social partners’ fundamental disagreements.

Similarly, on the main recent discussions, such as the targeted revision proposal and the implementation of the ‘equal treatment’ principle to posted workers’ remuneration, the two sides of industry ‘expressed largely opposing views, with some nuances’, as highlighted in a 2017 Eurofound report on Pay inequalities experienced by posted workers .

On remuneration, both, workers and employers’ organisations underlined the importance of social partners’ autonomy in the matter. ETUC ‘called upon the Commission to respect the principle of autonomy of the social partners to negotiate wages and the plurality of national industrial relation systems (…).’ On the employers’ side, Business Europe, the Council of European Employers of the Metal, Engineering and Technology-Based Industries (CEEMET) and the Confederation of European Managers (CEC) share the view that ‘the principle of equal pay for equal work would create an undue interference of the EU in the free determination of wage levels by the social partners’ (text from the explanatory memorandum).

On the other hand, regarding the overall ‘targeted’ directive proposal, the positions clearly diverge. ETUC looked forward to a revision of the Posting of Workers Directive as, in its view, several issues still need to be addressed. In this context, ETUC proposed to apply to posted temporary agency workers a ‘period of employment in the country of origin’; to better combat bogus self-employment; and to ‘implement better enforcement measures’ (text from the explanatory memorandum). Employer organisations at European level stated that there was, in general, no need to reopen the 1996 Directive. Both Business Europe and UAPME stated that priority should be given to the full transposition of the Enforcement Directive (2014/67/EU) and an evaluation of its effects. Business Europe also suggested that reopening the Directive could reduce posting activities because of the uncertainty the negotiation would create among companies (Position of 17 May 2016).

In the end, ETUC in its press release 'Justice at last: equal pay for posted workers' expressed its satisfaction with the agreement reached by the co-legislators.

Sectoral social partners

Among the European sectoral social partners, some initiatives and actions have been developed.

In the constructon sector, the European Federation of Building and Woodworkers (EFBWW) and the European Construction Industry Federation (FIEC) had, in November 2013, sent a joint letter to national employment ministers before the December Council meeting. They requested that, in Article 3, the directive should clearly state that all forms of fake posting (such as dependent employees posing as freelancers) be explicitly covered by the entire legislation of the host country, and that Article 9 should foresee an ‘open list’ of possible control measures. EFBWW and FIEC also asked for a mandatory prior notification of posting and an obligation to keep or make available copies of the workers’ employment contracts. FIEC expressed its support for the compromise text in a press release. EFBWW called the text ‘a disappointing agreement with low ambitions’.

In the transport sector, the social partners’ organisations have developed common views despite the clear differences between EU Member States’ positions. Indeed, some transport operators and ministries from former eastern European countries criticised the incorporation of transport workers into the scope of the posted worker directive, calling this ‘western European protectionist measures’ (see the 2017 Eurofound working paper on Fraudulent contracting of work: Road haulage sector ). On the other hand, European trade unions develop a common position regrouping members from across European countries: the ETF ‘Warsaw Declaration’ was signed in April 2017, by all – eastern and western – Member State organisations. Employers’ organisation IRU presented a strategy paper with an approval of extending regulations in place for HCVs to LCVs and a critical position towards the further liberalisation of ‘cabotage’.

The European Commission’s most recent policy proposals on the transport mobility package state that cabotage operations are principally regarded as being subject to the posting of workers’ regulations (regarding the statuary minimum wage and other minimum standards). The issue of whether not only cabotage but all international traffic – except for transit transport – must be subject to the posting of workers’ regulations has been discussed. In 2017, the Commission launched infringement procedures against some Member States (Austria, France and Germany) that are consequently applying the Posting of Workers Directive to international road transport scrutinising these regulations against the Treaty principles of freedom to provide services. Hence, the industry is waiting for a clarification regarding the binding standards of employment in international transport.